While the overall rate is what burdens consumers, the bigger worry for Fed policymakers was a sign that higher oil prices are feeding into a more generalized rise in prices.
The so-called core rate of inflation, with food and energy prices stripped out, rose 0.3 percent for the month. Rising oil prices have been a global phenomenon, driven largely by demand in emerging markets, that the Fed has little control over. But if last month's rise in the core rate persists, it would be a sign of a widening inflation problem, Mr. Bryson says.
"You're looking at a 3.5 percent [annual] core inflation rate, which is way too high for the Fed's liking," he says.
So far, prices for one of the key costs businesses face – labor – show little sign of spiraling out of control.
Because wages aren't rising very fast, that also limits the ability of businesses to pass along price hikes.
But the rising cost of energy has to be paid by someone, and energy-intensive businesses have been raising prices. Consider the automotive industry, now hit by a mix of sagging vehicle sales and rising prices. Automotive News recently found that:
•Polypropylene, a resin commonly used in plastic parts, has gone up in price by 45 percent in 18 months.
•Tire prices are up 20 percent in three months.
•A type of steel used to make bumpers, wheels, and frames has doubled in price since December.
Basically, consumers and businesses alike are adjusting to a new era in which energy costs more. Even with this week's easing, analysts don't foresee a return of cheap oil.
Whether it's a family budget or a business plan, a larger share of expenses now goes for fuel, leaving less for everything else.
Europe now appears to be joining the US in an economic slowdown, with some risk of recession on both continents. Both the Fed and the European Central Bank thus may stay "on hold" for some time and see if inflation pressures ebb due to a slack economy.